ECN211 EXAM 1 REVIEW ASU 2024-2025
QUESTIONS WITH COMPLETE ANSWERS
Ten Principes - CORRECT ANSWER Principle 1: People face tradeoffs
Principle 2: The cost of something what you give up getting it
Principle 3: Rational people think at the margin
Principle 4: People respond to incentives
Principle 5: Trade can make everyone better off
Principle 6: Markets are usually a good way to organize economic
Principle 7: Government can sometimes improve market outcomes
Principle 8: A country's standard of living depends on its ability to produce goods
and services
Principle 9: Prices rise when government prints too much money
Principle 10: Society faces a short-run trade off between inflation and
unemployment
First 4 principles have to do with what? - CORRECT ANSWER How people
make descisions
What do the last 4 principles have to do with? - CORRECT ANSWER
Productivity are the ultimate source of living
Scarcity - CORRECT ANSWER The limited nature of society's resources
Economics - CORRECT ANSWER The study of how society manages its scarce
resources
, ECN211 EXAM 1 REVIEW ASU 2024-2025
QUESTIONS WITH COMPLETE ANSWERS
The economist plays 2 roles - CORRECT ANSWER Scientist: Trying to explain
the world
Policy Advisers: Trying to improve the world
Circular-flow diagram is what? - CORRECT ANSWER A visual model of the
economy, slows how dollars and goods and services flow through markets among
households and firms
Factors of production are defined as? and what are some examples? - CORRECT
ANSWER the resources the economy uses to produce goods and services
including
1. Labor
2. Land
3. Capital (buildings and machines used in production)
Households in the circular-flow diagram do what? - CORRECT ANSWER 1.
Own the factors of production, sell/rent them to firms for income
2. Buy and consume goods and services
Firms in the circular-flow diagram do what? - CORRECT ANSWER 1. Buy/hire
factors of production, use them to produce goods and services
2. Sell goods and services for wages, rent, and profit
QUESTIONS WITH COMPLETE ANSWERS
Ten Principes - CORRECT ANSWER Principle 1: People face tradeoffs
Principle 2: The cost of something what you give up getting it
Principle 3: Rational people think at the margin
Principle 4: People respond to incentives
Principle 5: Trade can make everyone better off
Principle 6: Markets are usually a good way to organize economic
Principle 7: Government can sometimes improve market outcomes
Principle 8: A country's standard of living depends on its ability to produce goods
and services
Principle 9: Prices rise when government prints too much money
Principle 10: Society faces a short-run trade off between inflation and
unemployment
First 4 principles have to do with what? - CORRECT ANSWER How people
make descisions
What do the last 4 principles have to do with? - CORRECT ANSWER
Productivity are the ultimate source of living
Scarcity - CORRECT ANSWER The limited nature of society's resources
Economics - CORRECT ANSWER The study of how society manages its scarce
resources
, ECN211 EXAM 1 REVIEW ASU 2024-2025
QUESTIONS WITH COMPLETE ANSWERS
The economist plays 2 roles - CORRECT ANSWER Scientist: Trying to explain
the world
Policy Advisers: Trying to improve the world
Circular-flow diagram is what? - CORRECT ANSWER A visual model of the
economy, slows how dollars and goods and services flow through markets among
households and firms
Factors of production are defined as? and what are some examples? - CORRECT
ANSWER the resources the economy uses to produce goods and services
including
1. Labor
2. Land
3. Capital (buildings and machines used in production)
Households in the circular-flow diagram do what? - CORRECT ANSWER 1.
Own the factors of production, sell/rent them to firms for income
2. Buy and consume goods and services
Firms in the circular-flow diagram do what? - CORRECT ANSWER 1. Buy/hire
factors of production, use them to produce goods and services
2. Sell goods and services for wages, rent, and profit
